Summary of a Recent
Judicial Development in
Animal Feeding Operations

Minnesota Dairy's Defective Manure Basin Claims Were Barred;
Equitable Estoppel Claim Denied

Eric H. Foy
National AgLaw Center Research Associate

Summary of Decision

In Daley Farms of Lewiston, LLP v. Habben, No. A07-1050, 2008 WL 2105980 (Minn. Ct. App. May 20, 2008), the Court of Appeals of Minnesota found that the operator of a dairy farm had notice of the defective condition of manure basins for more than two years prior to bringing an action against basin designers, testers, and constructors (basin team) for basin defects. Minnesota's statute of limitations for improvements to real property is two years; therefore, the dairy farm's cause of action was time barred. The district court's grant of summary judgment to the basin team was affirmed.

Background

Daley Farms hired the basin team to design, test, and construct four manure holding basins built during a 1997-98 expansion of dairy operation to support 1,400 head of cattle. Id. at *1. By 1999, Daley Farms noticed that bubbles, which should not have been present, were developing in the basins. Id. at *2. In 2000, Daley Farms had contacted the basin team about the bubbles, but the basin team claimed that the bubbles were not its responsibility. Id. By 2002, some of the bubbles had grown to the size of a small barn, and the largest bubble was 30 feet in diameter and stood eight to ten feet above the liquid level. Id. In July 2002, Daley Farms acknowledged that it would, more likely than not, be required to reline the basins. Id. All of these events occurred at least two years prior to the cause of action at issue. Id.

Arguments

Daley Farms claimed that a question of fact existed as to the date that it discovered or should have discovered defects in the manure basins. Id. at *1. It based the argument on its assertion that all parties reasonably believed that the bubbles would dissipate over time. Id. Additionally, Daley Farms asserted an equitable estoppel claim based on the fact that the Minnesota Pollution Control Agency (MPCA) did not notify it of the fact that the bubbles presented an unsafe or defective condition until January 2004, when MPCA sent a violation notice. Id. Daley Farms claimed that it detrimentally relied on MPCA's inaction, causing it to believe the basins were uncompromised. Id. at *2.

The basin team based its defense on the two-year statute of limitations for claims arising out of improvements to real property in Minnesota, and claimed that Daley Farms' suit was time barred. Id. at *2.

Analysis and Holdings

According to Minn.Stat. § 541.051, the statute of limitations for damages based on improvements to real property provides that a person may not bring an action to recover damages for "any injury to property . . . arising out of the defective and unsafe condition of an improvement to real property . . . more than two years after discovery of the injury." Id. at *1 (quoting Minn. Stat. § 541.051). "The statute begins to run 'when an actionable injury is discovered or, with due diligence, should have been discovered, regardless of whether the precise nature of the defect causing the injury is known.'" Id. (quoting Dakota County v. BWBR Architects, 645 N.W.2d 487, 492 (Minn. App.2002)). The court stated that the laundry list of facts, including the presence of bubbles the size of a small barn in the basins, provided Daley Farms with actual or constructive notice of the defective condition of the basins. Id. at *2. Under the circumstances, the court held that Daley Farms' claims were time barred as a matter of law because "[a] party need not know the details of the evidence establishing the cause of action, only that the cause of action exists. When a party has this knowledge, it is his own fault if he does not avail himself of the means which the law provides for prosecuting or preserving his claim." Id. (citing Hydra-Mac, Inc. v. Onan Corp., 450 N.W.2d 913, 919 (Minn.1990)).

Regarding Daley Farms' equitable estoppel claim, the court held that the facts did not support the application of equitable estoppel because MPCA had no duty to remedy any defective condition related to the construction of the manure basins, and regulatory inaction by the MPCA would not toll the statute of limitations. Id.

The case was decided on May 20, 2008.